Major malls and the retailers within them have suffered financial devastation for months as COVID-19 shutdowns prevented them from doing business — sometimes pitting two parties struggling with finances against one another. One case in point is playing out with mall operator Brookfield Property Partners and Gap Inc.
Brookfield sued Gap in Texas last week. “For three months running, Gap has failed to pay rent at virtually every Brookfield location nationwide, even for stores that Gap is operating,” according to court documents viewed by The Dallas Morning News. “At present, Gap has withheld more than $2 million in rent from Brookfield in Texas alone.”
The paper quoted Gap’s statement in response to the suit: “We remain committed to working directly with our landlords on mutually agreeable solutions and fair rent terms, just as our industry and government partners have sat with us in good faith to shape the post-COVID business landscape.”
Difficulties making payments are occurring up and down the retail “food chain.” According to the Financial Times, “Brookfield is chasing small retailers to pay thousands of dollars in rent on outlets that were forced to close during the coronavirus pandemic, even as the Canadian investment group skips payments on its mortgages and asks lenders for forbearance.”
Brookfield has been leaning heavily on small retailers that operate kiosks and smaller stores, according to the Financial Times. When a group of tenants in one Brookfield mall reached out to the real estate giant, a lawyer responded by saying, “I will not address the merits of your ‘petition.’”
“Brookfield has requested forbearance from lenders who are owed payments on a dozen of its malls, according to reports circulated to credit market participants who have bought the debt. In other cases, Brookfield malls have been unable to repay mortgages that came due, according to the reports,” the Financial Times added.
Gap was sued by Simon Property Group last month over unpaid rent and other charges totaling $65.9 million, according to Bloomberg. The retail chain operates approximately 2,600 stores in North America, but less than 60% have reopened since state and local authorities began loosening restrictions.